Chapter Three

Chapter Three

Key Issues

Introduction

3.1
A number of concerns were raised in submissions from members of the
public, media groups, independent producers and staff of the ABC. A core debate
was the balance between the levels of internal production and co‑production
currently occurring at the ABC.

3.2
The current balance that exists at the ABC between internally produced
and co-produced programming was highlighted by the ABC announcement on 2 August 2011
that budget cuts would affect the number and amount of ABC produced programs.[1]

3.3
The overriding sense from submitters on both sides of the internal
versus co‑production debate is that a mixed production model is a
necessary feature of modern broadcasting. The critical point of divergence is the
impact recent programming decisions will have on a number of core issues particularly
program content that fulfils the ABC's Charter commitments and regional
production levels.

3.4
In particular, concerns were raised that television programs reflecting the
cultural diversity of Australia and programs of a specialised nature will be
reduced as a result of an increased focus on co-production or out-sourced
production. There is also a strong concern that outsourced production will
affect regional content, regional production and internal production capacity.

3.5
The level of transparency in the commissioning process was also raised
by a number of submitters and will be addressed in this report.

3.6
This chapter firstly considers the current mixed production model and
then addresses these issues in the following way:

programs of a specialised nature;

archiving;

regional content and production facilities; and

the sustainability of the ABC's funding base.

The mixed production model

3.7
Mixed production refers to the different options broadcasters have in
providing television content to fill on-air hours of television.

3.8
Internal production refers to programs which are produced internally
using 100 per cent ABC staff members, producers, production facilities and
funding. The ABC subsequently retains all rights for repeats, merchandising and
licensing as a result of owning the intellectual property and copyright of the
program. This can raise revenue when finished programs or program ideas are
sold to other broadcasters or through retail DVD sales.

3.9
Co-production occurs when the ABC commissions original content from
external sources (i.e. independent producers). The ABC provides some funds
while the external source provides additional funding. The ABC retains
editorial control as set out by editorial policies and by the ABC board;[2]
however the external producer will provide most of the staff and negotiate a
contract for the use of facilities. The ABC can negotiate a range of different
rights with the external source including inserting specific clauses relating
to the provision of footage as part of the Archive, rights to repeat content
and percentage of income opportunities. In evidence to the committee the ABC
have acknowledged that: 'Yes, the ABC’s capacity to earn revenue can be reduced
as a result of outsourcing, dependent on the rights retained by the ABC'.[3]

3.10
The third option open to the ABC involves the direct purchase of content
from another source. Traditionally this has been the BBC although content from
countries such as America has also been purchased by the ABC.[4]

3.11
Historically, production at the ABC occurred in-house or through
purchasing content, primarily from the BBC. However, as noted in earlier
sections of this report relating to the ABC Charter, there is no mandated
percentage relating to methods of production and co-production has become a
more important part of the ABC's production slate.

3.12
As mentioned above there was broad support for ABC's use of a mixed
production model as a necessary feature of modern broadcasting.

3.13
The main issue that emerged about the relative benefits of internal
versus external production and in particular the ABC's ability to leverage
additional funding, the BBC's quota model and the ability of staff to pitch
programming ideas.

Leveraging funding

3.14
The relative cost-benefit of producing in-house programming versus co‑produced
programming was a contentious issue and was discussed at length in several
submissions. Leveraging funds from other sources has been described by the ABC
as essential:

A key challenge for the ABC, as a taxpayer-funded body, is
meeting these commitments [broadcasting programs of a specialist nature and
those with broader appeal] in a way that ensures an efficient and effective use
of its resources. One of its key strategies has been through the use of a
mixed-production model—with the Corporation focusing on its strengths in
in-house production in some areas and partnering with the independent
production sector to produce quality content in others. The economics of the
industry make it impossible for the ABC to maintain the massive infrastructure and
staff base necessary to be a solely internal television maker.[5]

3.15
Leveraging works by allowing the ABC to draw on funding sources it would
otherwise be unable to access. This includes funds from state-based and federal
agencies, private investment, as well as the Producer Offset.[6]
The Community and Public Sector Union described the leveraging system as:

...relatively straightforward. By entering into a
coproduction deal with a private sector producer, and by trading what otherwise
would have been program rights held by the ABC, the private sector partner is
able to structure future licensing arrangements with Pay TV providers,
international broadcasters and the like. The private sector producer is also
able to seek a Producer Offset for some types of productions. In some cases the
deal is structured to secure state film funding for projects such as the South
Australian FACTory initiative and the West Australian ScreenWest arrangements.[7]

3.16
A number of independent producers and state government film bodies have
commented positively on the ABC's ability to leverage funds. For example, the
committee received evidence from Mr Tony Wright, Managing Director of December
Media, a Melbourne-based independent television production company which has
worked with the ABC for 15 years, that the ABC's proportionally small budget
can be leveraged:

For every dollar the ABC spends on commissioning, it benefits
from many more dollars in production finance, the costs associated with
securing that finance and the costs associated with the development of the
project. This also leverages the ABC’s minority budget contribution to a full
production budget.[8]

3.17
The joint submission received from 5 independent producers also stated
that leveraged funding arrangements have benefitted programs such as:

Rake, Three Boys Dreaming, Two Men In A
Tinnie, Year of the Dogs, On Trial, The Slap, The
Straits, Anatomy, Leaky Boat, My Place and Mrs
Carey's Concert.[9]

Over the last five years, the ABC’s contribution to external
projects has triggered, on average, at least double additional funding from
external funders such as state and federal funding bodies. These leveraged
funds are not available for internally produced ABC productions.[10]

3.19
Several submitters however questioned the value of leveraging as it
relies heavily on government funding from other sources. For example the CPSU
stated that 'a significant proportion of the additional ‘value’ being generated
or ‘leveraged’ is in fact government funding from either state or federal
funding initiatives'.[11]

3.20
The cost-effectiveness of co-production versus internal production was
challenged in several submissions which noted that there is no substantiation of
the cost effectiveness of outsourcing. For example, the Friends of the ABC
indicated that:

...no evidence has been provided to demonstrate that the
private production sector is more cost-effective than the ABC in the production
of programs of commensurate quality. There is no authoritative Australian study
that FABC is aware of that considers outsourcing of the kind in which the ABC
is engaging.[12]

3.21
This view was supported in a number of other submissions. The committee
received evidence from former staff-elected Director and current ABC presenter,
Mr Quentin Dempster in his private capacity:

There is nothing in the current industrial award payroll
costs of technical and production support – producers, directors, editors,
camera and sound operators, set makers, costumiers etc – which systemically
make program creation at the ABC more expensive than the commercial TV
production industry. In fact, I assert it is cheaper to make programs inside
the ABC given the facilities (sound stages, studios, rehearsal spaces,
post-production technology) already provided in the ABC’s property assets
around Australia. These assets, with capital costs amortised over decades, are
currently under utilised and (appropriately) let out to the private sector to
defray holding costs through facilities hire. The ABC does not pay state payroll
or company tax and has an operating cost advantage over the commercial TV production
industry because of this. Currently the ABC does not pay an efficiency dividend
often applied to other Commonwealth Government trading enterprises and departments.[13]

3.22
The ABC provided the committee with a detailed overview of how it makes
its programming decisions including a budget review, resources assessment and
proposal review for each proposed program.[14]

The BBC commissioning model

3.23
A number of submissions raised the possibility of the ABC adopting a
fixed model for commissioning production. These comments seem to particularly
stem from the BBC model currently in place which commissions production
according to a fixed percentage system. The BBC's model guarantees that 50 per
cent of production is in‑house, 25 per cent provided by external sources,
with a further 25 per cent competitive and open to internal or external
providers. This last quota is called the 'Window of Creative Competition'
(WoCC). The BBC has stated the following intention in its commissioning
decisions:

Our objectives throughout the commissioning process are to be
transparent about our content needs; give all suppliers equal access to clear
information; and to commission openly and fairly from across our diverse
supplier base.[15]

3.24
The BBC has identified two clear commissioning issues which are also
relevant to the ABC. First, the BBC is mindful of the differences which exist
in the production of different genres and states that 'the guarantees [for
in-house production] vary from genre to genre'.[16]

All WoCC commissions will be won only on the strength of the
submitted ideas (and not on the order they are submitted).

To ensure the system is fair, there will be a wide range of
programming available in the WoCC across each genre, at a wide range of prices.

In order to meet our overall targets for programming from the
nations and regions, we will need to plan for some of the WoCC to be
commissioned from producers outside London - but these could either be from
regionally based independents or from regional BBC production centres.[17]

3.26
Preliminary research into other overseas models used by public
broadcasters suggests that there are a number of public broadcasters such as the
United States Public Broadcasting Service (PBS) which does not directly produce
any programs, instead commissioning the entirety of its schedule from independent
producers. Funding for PBS programs comes from a variety of sources—including individual
donors (27.6 per cent), local businesses (16.4 per cent), the Corporation
for Public Broadcasting (15.1 percent), state governments (12 percent) and
colleges and universities (11 percent).[18]

3.27
Amongst public broadcasters which do produce some internal content it
would appear that there are a number of different models being used. The
Canadian Broadcasting Corporation/Radio Canada sources programs both internally
and from external producers.[19]
A report on Hong Kong public sector broadcasting notes:

In addition to creating in-house programmes, CBC sources
programmes from independent producers, which accounted for 81 percent of
non-news and sports programmes of its English-language television service in
2004–05.[20]

3.28
In Europe, the Television Without Frontiers Directive (TVFD) states:

Member States shall ensure, where practicable and by
appropriate means, that broadcasters reserve at least 10 % of their
transmission time, excluding the time appointed to news, sports events, games,
advertising and teletext services, or alternately, at the discretion of the
Member State, at least 10 % of their programming budget, for European works
created by producers who are independent of broadcasters.[21]

3.29
Further, a report on regional television production in South Africa notes
that public service broadcasting needs to include programmes:

...made by the nation’s public broadcaster ‘as well as those
commissioned from the independent production sector.[22]

3.30
The committee has received evidence from the independent production
sector and from the Community and Public Sector Union both supporting a fixed
commissioning model along the lines of the BBC's WoCC. The CPSU referred to the
BBC quota system as a positive model which it believes the ABC would benefit
from, stating:

The CPSU advocates what it believes to be world best practice
in commissioning models, the approach adopted by the BBC which provides a floor
level of internal production, and ensures that a proportion of programming is
open to competitive tendering by internal and external.[23]

3.31
This view was repeated in the joint submission of five independent
producers which affirmed that:

...we believe that the ABC should seek not just to continue its
existing support of external productions, but to further it by adopting the BBC
model of:

50% mandated internal production

25% mandated external production

25% contested between internal and external production.

We believe this well proven BBC model will provide the ABC
with the capacity, and flexibility, to commission the best ideas from across
Australia’s television production community, and to ensure its ongoing
relevance in a rapidly-changing media landscape.[24]

3.32
However, Mr Simon Whipp, Assistant Federal Secretary, Media,
Entertainment and Arts Alliance which represents individuals who work in
Australia’s media and entertainment industries, expressed reservations with the
ABC adopting the BBC model:

The reason we would not [support the ABC adopting BBC
commissioning model] I think is because the whole BBC model was a push by the
independent sector to ensure that the BBC outsourced a certain percentage of
their production. I do not think there is in Australia a problem of lack of
outsourcing by the ABC. The problem is rather the reverse.[25]

3.33
The ABC's Managing Director, Mr Mark Scott, stated in strong terms that
he does not support a fixed internal quota:

Senator Ludlam: ...how do you feel about somebody,
maybe parliament, imposing a quarantined amount of internal production across
your different program streams? Would that be just profoundly unhelpful?

Mr Scott: Unhelpful and unwise, and I will tell you
why. We are an independent public broadcaster, and I do not think we really
want to set the stage for parliament doing the programming, not even parliament
programming the mix in the shape of the schedule that we put together. We have
specialist people internally who are specialists in their genres, who are
specialists in scheduling and who work well with internal staff and the
independent production sector. I fear that the rigidity that that kind of
modelling might bring would hinder the ABC rather than help it. It certainly
would not make us flexible and nimble in dealing with what is now a very, very
competitive sector. So I would argue that, in trying to be helpful, the
parliament, if it went down that road, could well be harmful. It would inhibit
the independence of the ABC Board to make the decisions it needs to make under
the charter and the power that it has under the act to ensure that the
programming mix is right and delivered efficiently. So I do not think that
would be a wise path.[26]

3.34
In this regard the committee notes that an ABC response to a question on
notice shows that over almost all of the past decade, the proportion of
expenditure on internally produced content has steadily declined from 65 per
cent in 2001–02 to 52 per cent in 2009–10. By comparison the co-produced
content has remained largely constant at around 30 per cent.[27]
There was a significant deviation to this trend in 2010–11, when internal
production declined to 45 per cent while co-produced content rose to 42 per
cent. The ABC's table setting out these figures is reproduced at Appendix 4.

Ability of ABC staff to pitch ideas

3.35
Concerns were raised about the apparent lack of consideration ABC
management currently gives to proposals by internal staff for new programming
ideas. A term which was frequently raised in submission was 'pitching ideas'.
The following exchange broached the opportunities ABC staff have in pitching
ideas specifically in relation to staff from the ABC Arts Unit:

Senator Wright: ...from what I understand, they [the
ABC Arts Unit] were not actually given the opportunity to pitch, bid or
propose—that is what it was in the submission—to show that they may have had
the capacity to do that. I just wonder why that would be the case.

Mr
Dalton: I do not really see it as a matter 'an opportunity to
pitch'. Certainly if somebody had had an idea to do a feature length
documentary such as Mrs Carey's Concert then they could certainly have
proposed that idea within the ABC. I think the problem which would then
immediately arise is: how would you finance it?[28]

3.36
Further evidence relating to the capacity for internal staff to pitch
ideas was raised in ABC's response to a question on notice about the Talking
Heads program:

Question: What opportunities did the ABC provide to its staff
to rebuild a local replacement program for Talking Heads when it was
considering not re-commissioning the program?

Answer: There was no
requirement to replace Talking Heads in the schedule. Despite this, a number of
ideas were submitted from the team. None of those ideas were considered by ABC
TV to be strong enough to commission or develop further.

Local staff were instead
encouraged to focus on producing new ideas for a brand new format for Poh's
Kitchen. A number of ideas from the team were considered with the travel series
emerging as the strongest idea.[29]

3.37
The committee heard evidence however from a number of submitters that
ABC staff were told not to pitch ideas for new programs from within the ABC.
Ms Bobbie Mackley, a former ABC staff member based in Perth from 1980
until 2010 and staff representative for the CPSU reported that:

In May 2010 Kim Dalton met with Perth staff, at their
request, while he was in Perth for discussions with the independent production
sector. This was the first and only time the Director of ABC Television had met
with a large group of Perth staff. He quite openly and clearly told the 30 or
40 staff present that only program ideas pitched from outside the ABC would be
considered for production. In effect, if you have an idea worthy of production
by the ABC, you need to resign from the ABC first.[30]

3.38
This position was similarly advanced in the submission of the Community
and Public Sector Union which indicated that ABC staff are restricted from
pitching concepts:

He [Mr Kim Dalton, Director of Television, ABC] has repeatedly
advised ABC employees who have attempted to ‘pitch’ ideas internally that if
they want to make a pitch, they know what they have to do - resign from the ABC
and pitch the idea from outside.[31]

3.39
A submitter who requested their name be withheld, discussed
opportunities for ABC staff to suggest ideas in different terms by commenting
that outside support is essential to successfully pitch ideas to ABC
management:

Equally important are ABC employees getting the opportunity
to launch ideas for programs. It’s known you have to get the support of an
outside producer before pitching a given program idea. ABC TV management should
have more of an open door policy, allowing ideas to grow from within the ABC’s
own ranks. There is a lot of creativity and skill to tap.[32]

Committee comment

3.40
The committee supports the ABC's mixed production model referred to
earlier in this report. The committee acknowledges that there will be times
when co-produced content is preferred and others when internally produced
material is preferred.

3.41
It is clear that a mixed production model is commonplace around the
world, including in North America, Europe and Asia. Based on the evidence
presented during this inquiry, the committee recognises that the ABC is
following a wider trend to commission content from external sources. The
committee has not, however, heard enough evidence to support the introduction
of a fixed quota production model at the ABC.

3.42
The committee affirms the BBC's aim of being transparent about its
commissioning decisions and commissioning openly and fairly and that this is a
standard that the ABC should genuinely adopt.

3.43
The committee notes the submissions put forward by organisations such as
the independent producers that co-production complies with ABC editorial
policies and that the ABC works closely with independent producers.[33]

3.44
Although a number of submitters from the independent production sector
and also state screen agencies commented positively on the process of
leveraging funding through co-productions, the committee notes that
partnerships with the ABC benefits them and enables them to compete for
production space on television.

3.45
The committee also notes the concerns raised about the recent
outsourcing of content and the degree of reliance on co‑production.

3.46
The committee believes that a degree of competition between internal and
external sources for pitching new program ideas is in the best interests of the
ABC's television programming, noting that from the audience's perspective the
two distinct forms of commissioning should complement each other. Sourcing the
best program ideas either from within or outside the ABC will ultimately be in
the best interests of the broadcaster. The committee therefore supports ABC
staff being actively encouraged to suggest ideas to ABC management and that any
implicit or explicit restrictions on staff from pitching ideas are removed.

3.47
The suggestion that ABC staff are effectively being discouraged from
bringing forward programming ideas has prompted some committee members to call
for the ABC to introduce procedures that will enable internal staff, including
in the BAPH states, to pitch program ideas and that the ABC pays genuine
attention to the feedback it receives. One way to achieve this outcome could be
through the employment of a travelling commissioning editor to consult with and
represent the BAPH states and regional areas.

3.48
The committee notes that this report has been undertaken in the context
of forced redundancies in some areas announced by ABC management. Some
committee members thought it important to call on the ABC to suspend decisions
concerning ABC staff redundancies until after the final outcomes of the committee's
recommendations are known.

3.49
The committee believes it is important for the ABC to ensure the value
for money, transparency, skill retention and capacity to internally produce
quality programming. Accordingly, the committee makes the following
recommendation.

Recommendation 1

3.50
The committee recommends that the ABC ensure that it maintains an
effective capacity to internally produce quality programming across the regions
in addition to news, sport and current affairs. The committee notes that the
increasing use of external producers has the capacity to diminish the ABC’s
independence and skill base.

3.51 The committee calls on the ABC and the Minister for Broadband,
Communications and the Digital Economy to identify and implement processes
which ensure value for money, transparency and skill retention. In the context
of the need to maintain the ABC's skills base, the committee calls on ABC
management to immediately reassess the implications of any employment decision
on its capacity to deliver quality programming across the network.

Programs of a specialised nature

3.52
From the evidence received there appears to be a significant concern within
aspects of the Australian community that out-sourcing production is having, and
will continue to have, a negative impact on television content.

3.53
The committee notes that members of the public were particularly troubled
by the apparent loss of specialised program content tailored to certain
interest groups. Many of these submissions understandably focused on the arts,
as it is one of the key areas affected by the recently announced cuts. For
example, the committee received numerous submissions which expressed concerns
similar to those raised by Ms Penelope Shepherd:

I wish to register my shock and dismay at the announcement by
the ABC of the axing of Art Nation and the closure of the ABC Arts Unit, the
axing of the New Inventors and the Collectors programs. My understanding was
that as part of it’s [sic] charter the ABC catered for a wide variety of
Australian tastes. It catered for a diversity of cultural interests and needs.[34]

3.54
This view has also been voiced by others:

This flagship arts program is my only source of information
on the arts that gives a national perspective. Knowledge of what is happening
in each region throughout Australia is important to my sense of cultural
connectedness.[35]

3.55
The loss of arts content has also sufficiently concerned independent
arts bodies which presented evidence to the committee that the loss of arts
content, such as Art Nation, fundamentally affects the ABC's charter commitment
to 'encourage and promote the musical, dramatic and other performing arts in
Australia'.[36]
The Tasmania Theatre Company stated that:

The ABC produces so few news programs about key contemporary
arts issues and events that is perilously close already to not fulfilling its
charter.[37]

3.56
The confederation of peak national arts bodies, Arts Peak, also raised
concerns with the cancellation of arts programming as part of the ABC's current
schedule, submitting that:

In taking these actions [reducing arts content for example
the cancellation of Art Nation and potentially Artworks on Radio
National], the ABC leaves no overall arts news or magazine program on the
national broadcaster, with the exception of the occasional arts event report
located almost at the very end of the 7.00pm TV News on ABC 1. Without
providing any regular daily and weekly arts news coverage, in taking this decision
the ABC is effectively banishing the arts from its national current affairs
coverage. This is not just a case of updating or reformatting arts programs
that have reached their use-by date; it creates a vacuum.[38]

3.57
More generally, there was a pervasive belief that the ABC 'has lost its
ability to make the unique quality programmes it was once famous for'[39]
and that 'there has already been some “dumbing down” with the loss of specific
programme areas'.[40]
This sentiment was similarly expressed by Ms Diane Hart:

I mourn the loss and the losing of science information, of
local sports, of the radio program “star stuff” (last round of cuts), of drama
that keeps me riveted, of seeing modern dance programming, of exposure to
different ideas, of debate and difference.[41]

3.58
The committee accepts that this issue was of deep concern to submitters.
The committee believes that these views express more fundamental questions in
terms of specialised program content for the arts versus programs of broader
appeal. The committee also recognises that there is a broader issue at stake relating
to the balance between ratings and the production of programs of critical
acclaim. For example the ABC TV Arts Unit submitted on this matter:

Both ABC Managing Director Mark Scott and the Director of
Television Kim Dalton have stated publicly that the weekly arts program Art
Nation was axed because of declining ratings and the need to focus on prime
time.[42]

3.59
The Friends of the ABC also highlighted similar concerns with the ABC's
commitment to pursuing ratings:

The comments of Mark Scott and some ABC networks heads over
several years indicate that they view ratings as a prominent indicator of the
success or otherwise of many parts of the ABC.[43]

3.60
This view was repeated in evidence by Ms Glenys Stradijot, Campaign
Manager for Friends of the ABC, who reiterated this belief in the following way:

What we see is that, in recent years, the ABC is being taken
in a different direction in terms of the approach of the ABC's management to
its programming. There is increased interest in measuring the success of
programming through ratings, the ABC is increasingly engaging in activities
that imitate commercial TV, promotions on television and things that distract
the audience, and the outsourcing.[44]

3.61
However Mr Mark Scott, Managing Director of the ABC, gave evidence that
ratings were only one part of the equation the ABC considered in commissioning
programs: 'We do need to watch the audience numbers too. People ask about
ratings. What I say about ratings is this: ratings matter; they are not the
only thing that matters'.[45]

3.62
In support of the ABC's position that they did not rely on ratings as a
sole indicator of success, programming decisions were referred to as developing
out of a range of processes:

The ABC Board and Management consider that ratings are just
one measure that is considered in assessing programs. ABC also considers the
impact and audience engagement, quality of the product, critical response and
value for money.

Television management is responsible for decisions on
evaluating the performance of TV programs. Regular updates are provided to the
Board.[46]

3.63
In the ABC's submission to the inquiry however, ratings was the main
metric used to explain the cessation of Art Nation and New Inventors:

In the case of New Inventors, ABC Television commissioned 314
episodes and invested over $32 million across its eight series. However, over
that run audience fatigue became evident, with the program’s audiences falling
from a peak of over a million viewers in 2004 to an average of 500,000 in 2010.

The decision to cancel Art Nation reflected similar audience
concerns. In 2011 to date, the program has averaged around 77,000 viewers each
week, down from 104,000 the previous year. Sunday Arts, the program that it
replaced in 2010, had average audiences of 145,000 in 2009 and 175,000 in 2008.
This pattern of declining audiences for a late-afternoon arts program motivated
ABC Television to consider new and more effective ways of providing quality
content to audiences with an interest in the arts.[47]

3.64
The success of out-sourcing Bananas in Pyjamas was similarly
described specifically in respect to audience numbers in Australia and within
the overseas market:

The original series of Bananas in Pyjamas attracted an
average audience of 168,000 viewers on ABC1 in Australia’s five capital cities
during 2010.

The animated series launched on ABC2 in May 2011 with an
initial audience of 262,000 viewers (comprising 174,000 viewers at 8am and
88,000 viewers for the repeat showing at 1.30pm). In July 2011, the animated
series was moved to a new timeslot of 5.50pm on ABC2. In this new timeslot, it
achieved an average audience of 203,000 viewers over the first three weeks from
25 July 2011.

This success is not limited to Australian viewers. The animated
Bananas in Pyjamas is also broadcast with great success in the UK and the ABC
anticipates it being rolled out into markets across Europe, the Middle East,
Africa and Asia in coming months. This evidences that the new animated series
has revived a once ailing format, bringing it to millions of new fans.[48]

3.65
The committee also received evidence that the recently announced program
cuts were decided without prior staff consultation. For example Mr Thomson of
the CPSU stated:

So what tends to happen is that the union and our members are
advised at the time decisions are taken to axe programs. In the past there was
a different system that operated, and that was because there was a commitment
to retaining internal production at the ABC and before decisions were taken to
axe programs, in most cases the staff would be told that the programs they were
working on were tired, and often they were the first to recognise that anyway,
and they would have been given an opportunity to rebuild programs and come up
with other ideas, new pitches, and to start building new programs before the old
ones got axed.[49]

Committee comment

3.66
The committee recognises that as an independent national broadcaster the
ABC has the right to produce programs it believes will meet its Charter obligations
and that editorial decisions are the responsibility of ABC management and
should not be influenced by government. The committee however is mindful that
the ABC is not a business but a publicly-funded statutory authority and that
its responsibilities are not those of a commercial broadcaster.

3.67
The committee also recognises the complexity of the ABC Charter
responsibility in providing an appropriate balance between those programs
designed to appeal to a mass audience, different to that of the commercial
stations, and those particular cohorts with special interests or those
reflecting and supporting cultural and regional diversity. The committee notes
the concerns of submitters such as Friends of the ABC which indicates that the
ABC is overlooking or flouting the original spirit and intention of its
Charter, for example producing content that would be more appropriate for a
commercial broadcaster.[50]

3.68
The committee believes that now is an appropriate time for the ABC to
genuinely provide explanation for where it sees its future as a broadcaster of
both wide appeal and specialist interest as well as how it reflects the
cultural and regional diversity of the Australian community.

Recommendation 2

3.69 The committee recommends that ABC management sets out in detail where it
sees its future as a broadcaster and a content producer, and particularly with
reference to the ABC Charter responsibilities of balancing programs of wide
appeal and specialist interest as well as how ABC programming reflects the
cultural and regional diversity of the Australian community.

3.70
In this regard the committee welcomes ABC's commitment that it will
develop a television production strategy which it will release before the end
of 2011.[51]
The committee also welcomes Mr Scott's commitment to provide greater
certainty for staff:

...I am keen that we have some more certainty for our staff
as best we can on this mix for the next couple of years. That is the plan that
we are working towards. Now, you cannot be too precise around everything
because sometimes some things change—audiences or programming that you feel you
need to make. But we are looking for more certainty and that is what we are
working on. We have been discussing amongst the executive, we have been
discussing it with the board meeting, and we have more work that we need to do.
But as I say, I am hopeful that by year's end we will be able to provide some
greater clarity on the outlook for our television production model for the next
three years, just as we had a plan three years ago, in a sense—our television
production model up to about now.[52]

3.71
The committee notes that the ABC was unwilling to provide the committee
with the ABC's previous production strategy, which Mr Scott described as a
'production guarantee'.[53]
The committee believes that in future the ABC needs to be more open about its
commissioning model.

3.72
Whilst welcoming the ABC's commitment to greater staff certainty, it is
clear that the upcoming production strategy will be a model based on a top-down
assessment. In this regard the committee believes it would be preferable for
the ABC to consult with its staff about the television production strategy
prior to its formal release. To achieve this aim the committee recommends below
that the ABC release a consultation draft strategy prior to its finalisation.

3.73
Whilst acknowledging that ABC editorial decisions are the responsibility
of ABC management, the committee also believes that in future ABC management
should engage its stakeholders prior to significant changes to internal
creative and production structures such as the specialist ABC Arts Unit or the
Natural History Unit. Given its importance to regional production and programming
content, there should also be consultation prior to any significant changes to
the ABC's state-based activities. Furthermore, noting the ABC Charter
obligation to 'encourage and promote arts, including musical, dramatic and
other performing arts', the committee believes that the ABC should urgently
publish a strategy outlining how it can meet this obligation given the planned
disbanding of the ABC arts unit.

Recommendation 3

3.74 The committee recommends that ABC management release a draft television production
strategy for staff, community and private sector consultation, prior to its
finalisation.

Recommendation 4

3.75 The committee recommends that the ABC consult with stakeholders prior to
making significant changes to either internal creative and production
structures or state-based activities.

Recommendation 5

3.76 The committee draws the attention of ABC management to the ABC Charter
obligations to 'encourage and promote arts, including musical, dramatic and
other performing arts' and calls on ABC management to urgently publish a
strategy outlining how it can meet this obligation given the planned disbanding
of the ABC arts unit.

The ABC as a cultural archive

3.77
The ABC's role as an archive of Australian culture, 'a repository for
the social history of Australia'[54],
was raised by a number of submitters and witnesses. Their concerns centred on
the ABC's ownership of content and the accessibility of this content,
particularly as a record of Australian culture.

3.78
The ABC Television Archives summarised these concerns, and explained the
relationship between content ownership and the use of content as a resource and
record of Australian history and culture:

As a result of over 50 years of internally produced TV
broadcasting, the ABC currently has a rich and diverse archive; the biggest of
all the television networks in Australia. This archive is not only used by ABC
productions but also by third-party
clients. The ABC Archive’s importance as a repository of cultural information
and of political and social history extends far beyond the demands of the ABC,
and is a crucial resource for the entire Australian film and television
production community. Being a government organisation, the ABC Archives are subject
to stringent archival policies that ensure the content is catalogued appropriately,
stored correctly and accessible by the public and private sectors.

A shift away from internal product...will result in a radical
diminishing of the ABC’s archival scope, in both size of the collection and its
content...the copyright for co-produced
footage rests solely with the co-producer;
meaning that important content, such as unique camera overlay, rare moments of
history, script documentation or exclusive interviews, will no longer be easily
accessible to the wider community or the ABC. Independent producers do not
necessarily share the same commitment to archiving their footage, scripts,
photographs or ancillary documentation as the ABC does, thus making co-produced content
inaccessible for future use for all Australians. Co-produced footage no longer has value
beyond the few transmissions the ABC purchases...taxpayer-funded, internally produced
footage has the potential to be reused hundreds of times, for the financial and
cultural advantage of the ABC and the nation.[55]

3.79
The ABC Television Archives went on to explain that:

The ABC seeks to continue building its strong news archive,
but the beauty of internal television production within the ABC is that the
archive is able to draw its contents from beyond the news scope; to document
our social and cultural identity in a way no other television network does in
Australia. Arts, science, natural history and religion are not covered in-depth in news programs
the way they are in television productions. It is a simple equation; the fewer
programs the ABC produces, the less content we have, and the less viable it is
for more programs to be produced internally.[56]

3.80
The Media, Entertainment and Arts Alliance South Australia (MEAA SA),
the Community and Public Sector Union (CPSU) and Mr Quentin Dempster shared
this view.[57]

3.81
The CPSU opined that the diminution of internal production at the ABC
would mean 'an invaluable national archive of TV Arts owned by the ABC in
perpetuity will not be added to'.[58]

3.82
In response, independent producers argued the content of television
programs was a less important archive than news and current affairs. Ms Sally
Ingleton, Company Director of 360 Degree Films, stated:

I think the archive is really critical. But I would say that
probably the most valuable archive is news and current affairs. Certainly that
is one area of the ABC that is not being cut back...[59]

3.83
Ms Ingleton went on to explain that:

I would have to also say that sadly a lot of that stuff is
not kept by ABC. I know that there have been times where I have tried to access
the original camera tapes for arts programs and they have all been wiped. They
have just basically been recycled. All they actually keep is the final program.
In the independent sector, we always have to lodge our programs with the
National Film and Sound Archive, so everything is kept for the record. We keep
all our tapes.[60]

Another thing about
archives: we make entertainment shows and factual shows, mainly for the ABC,
and I am fairly sure that there is a free archival use clause in all of our
contracts...that lets the ABC continue to use bits of our shows for archival
purposes for no charge. I am certain that that is there.[61]

Committee comment

3.85
The committee notes the important cultural record provided by the ABC
archive. This is of particular importance in the area of news and current
affairs but also extends to other areas of Australian cultural endeavour. The
committee also notes the requirement for independent producers to lodge their
programs with the National Film and Sound Archive.

3.86
The availability of Australia's cultural history to future generations
is important. In the committee's view this ought to be a consideration but not
the ABC's primary one when making commissioning decisions. Although the
committee did not receive conclusive evidence on this point, the ABC should
commence or continue to include free archival use clauses wherever appropriate in
all co-production contracts.

Recommendation 6

3.87 The committee recommends that wherever appropriate the ABC include free
archival use clauses in all future co-production contracts.

Regional production and content

3.88
A number of submissions described the importance of maintaining
regionalism in both program content and production capabilities in areas
outside of Sydney and Melbourne.[62]
The committee notes that this trend is part of a sustained move towards
centralisation to the eastern seaboard and particularly Sydney, which was noted
in the 1995 'Our ABC' inquiry.[63]
This report addresses both the issue of regional content and regional
production.

3.89
The terms of reference for this inquiry highlighted whether television
content could continue to be created, produced and owned in the capital cities
of Brisbane, Adelaide, Perth and Hobart, often referred to as the BAPH states.
Former President of the Friends of the ABC (SA branch) the Hon. Sandra Kanck
provided the following response in her submission:

That east-coast
centrism has implications for program content, and I invite you to examine the
percentage of stories being aired on “7.30” which originate from, for example,
South Australia and Tasmania: you will find that it is well below what one
might expect on the basis of the percentage of the Australian population that
lives in these states.[64]

Regional content

3.90
With regard to regional content, the committee received submissions from
a number of state-based interest groups which provided evidence relating to
individual state concerns. For example, the situation in Tasmanian appears in
the following submission from The Tasmanian Theatre Company:

Tasmanian artists could make a reasonable argument that this
charter [the ABC Charter] is barely being fulfilled now. Local arts stories are
very rarely broadcast on any ABC medium in this state and there is no indication
that a reduction in national broadcasting of arts news will lead to any kind of
increase in local coverage.[65]

3.91
Similar concerns have been raised by other states. The submission from the
Western Australia independent arts body, the Chamber of Arts and Culture WA,
raised the matter that Western Australia based content is declining to levels
which are causing alarm:

Here in Western Australia, we now have a particularly dire situation
in which we are providing no significant program content for the national television
network. This is in spite of a major financial investment in a state-of-the-art
production studio at the ABC’s new East Perth headquarters. Given this, on a
national level, we are currently virtually “out of sight, out of mind”. And
this is a state that continues to make a massive contribution to the Australian
economy, and one that is also punching above its weight in terms of its
contribution to Australia’s arts and cultural life.[66]

3.92
Although the ABC has suggested that the production of Poh's Kitchen
is a positive benchmark of South Australian content,[67]
evidence received from South Australian bodies expressed similar concern about
the lack of regionalism in content appearing on the ABC.[68]

3.93
The committee received evidence from ABC staff members that out-sourcing
production will affect the extent to which regional content is sufficiently
represented on the national broadcaster. For example, while the core of the ABC
TV Arts Unit was based in Melbourne they made the point that they took
extremely seriously the need to represent local content issues. They describe
their activities in this way:

Art Nation also distributes other internal ABC Arts content
from regional Australia via initiatives including ABC Open, ABC Local and using
technology such as Skype, and has contributed its content to other parts of the
ABC, including News 24, Big Ideas and Radio National.

One of the vital roles of a weekly arts program is to provide
coverage in centres outside of Sydney and Melbourne, beyond where the Unit’s
staff is based. An audit of internally made content demonstrates that virtually
every episode of Art Nation since 2010 has featured regional content from right
across Australia – from WA, QLD, SA, Tasmania, the NT and the ACT.[69]

3.94
Mr Scott told the committee that the ABC does not automatically equate
production in regional areas with the production of regional content:

I am not sure that simply scattering generic programming around
the country is the same thing as doing television production that reflects the
expertise, the history, the geography and the culture of that part of the
country back into the national schedule.[70]

3.95
The following exchange at the committee hearing elaborates on this point:

Senator XENOPHON: Sorry, Mr Scott, but the
information I have from my contacts within the ABC is that, when they are told
to pitch nationally for a program, they are told, 'We don't want anything too
regional; it's got to have a national feel to it.' Am I missing something here?

Mr Scott: All I am saying is that some of best
regional programming we have done has reflected a particular part of Australia.
There is no doubt that some of the stuff we have commissioned with the
independent production sector is going to reflect a particular part of the
country too. One of the strong reasons for doing regional productions is to
reflect the diversity of the country to the country.[71]

Committee comment

3.96
Based on the evidence presented during this inquiry, the committee
believes that the ABC needs to be vigilant about its Charter commitments to
broadcasting 'programs that contribute to a sense of national identity and
inform and entertain, and reflect the cultural diversity of, the Australian
community'.[72]
It is clear to the committee that one core way of achieving programming which
reflects cultural diversity is to broadcast programs which represent regional
issues and subject matters.

3.97
In this regard the committee emphasises the importance of maintaining
and developing regional content on ABC television. The committee recognises the
effective way that the ABC has achieved regional coverage through its Local Radio
network. The committee also notes and endorses the following statement from the
ABC's 2010 annual report:

Public broadcasters are particularly intrinsic to regional
life, as the relative cost of providing localised services beyond major
population centres is not a commercially attractive proposition.[73]

3.98
The committee would support the ABC publishing annual targets of
regional content on ABC television against which it reports in order to meet
its Charter obligation to 'reflect the cultural diversity of the Australian
community'.

Recommendation 7

3.99 The committee recommends that the ABC publish annual targets of regional
content on ABC television against which it reports in order to meet its Charter
obligation to 'reflect the cultural diversity of the Australian community' and
to promote ongoing internal program production in the BAPH states and regional
Australia.

3.100
If the achievement of such targets is found to be inadequate, the
committee encourages the government to implement requisite proportions of
regional content on ABC television.

Regional production facilities

3.101
Regional production facilities include a raft of physical assets
including sound stages, studios and post-production suites and OB vans.

3.102
A core issue which was raised during the inquiry is whether internal ABC
regional production in the BAPH states will be reduced to levels that cannot be
rebuilt in the short-term as a result of current decisions to out-source
productions to independent producers.

3.103
The submission from the Community and Public Sector Union drew attention
to the loss of production capability in Hobart because of the decision to cease
the Collectors:

Hobart production capacity is endangered by the recent
announcement. Collectors is a Hobart based production that is the staple of ABC
Tasmanian production. The announcement that the program will be replaced by a
new program, Auctions, gave no reprieve to the Tasmanian production crew. The
Collectors production is to be replaced by a short run (5 episodes). The
replacement program is only ten episodes compared with the 22 episode production
of Collectors.[74]

Should this increase [in base funding] not occur, we are
likely to see an increase in outsourcing of production and, in the alliance's
view, further centralisation of production in Sydney and Melbourne.[75]

Outside broadcast vans

3.105
Several submitters raised the subject of the ABC's outside broadcast
(OB) vans which in particular relates to the issue of the ABC's coverage of
regional events.

3.106
In response to questions on notice, the ABC provided the following
general information on the use of OB vans:

The ABC operates nine outside broadcast (OB) vans which are used
extensively for a range of television genres and programs, including news and
current affairs. The OB vans are also a central part of the ABC’s disaster
recovery strategy. It costs the ABC approximately $2.79m per year to provide
and maintain the vans. Personnel costs vary, depending on the complexity of the
broadcast and are charged to the relevant program.[76]

3.107
In response to questions on notice on the potential flow on effect
reducing local sports coverage would have on the ABC's ability to cover significant
multi-camera events, such as ANZAC day, the ABC stated:

The ABC believes there would be no impact on the capacity of
the ABC to cover multi-camera events if it chose not to broadcast local
football in the future.[77]

3.108
The ABC further stated that 'There is commercial capacity for OB vans
across Australia'.[78]

3.109
Mr Nick Murray, Managing Director, Cordell Jigsaw Productions Pty Ltd,
told the committee that the cost of operating and maintaining OB vans is a
costly exercise and not core business for the ABC:

...the reason for the cost is the fact that the crews who are
working on those OB vans actually only work for one or two days a week whilst
being paid full-time, and probably more than full-time because most of their
work occurs on weekends when they are being paid penalty rates. It is not the
broadcast of the sport itself that is inefficient, it is the huge cost of
maintaining the OB vans in every state. It is much cheaper to hire OB vans and
crew in. The ABC is the only broadcaster in Australia which owns outside
broadcast vans. Owning vans and owning studios are not core ABC activities...[79]

3.110
Several submitters noted the importance of the ABC owning and operating
OB vans to cover both sporting events and significant multi-camera events.
ANZAC day coverage in regional areas such as Tasmania was raised by Community
and Public Sector Union as one example of how OB vans are currently used:

When we are discussing the loss of sport and of football, it
is important to remember that the future of sport is inerrably linked with the retention
of the Outside Broadcast vans that support it. To the informed, the discussion
about the axing of sport is as much about the scrapping of the OB vans that are
required for multi-camera outside broadcasts. The closure of sport would inevitably
reduce the business case for the retention of the OB vans, and with the
capacity, particularly of the smaller branches, to cover large external events
including the ANZAC Day marches.[80]

3.111
Further, an ABC staff member, Mr Phil Long, provided evidence on
Tasmania's OB van in his submission. He highlighted reasons why the ABC's OB
vans are necessary both for coverage of sporting and other events, as well as
an employment opportunity for 6 technicians:

Tasmania has two outside broadcast vans. Of the two, the
ABC’s is the most capable and comprehensive. The other van is owned by a
commercial network is [sic] has very limited capability....Part of the reasoning as to why we have an OB van on
the island is due to the commitment to a winter season of sport. Over the past
few years, this has included state and national football, hockey, basketball
and netball. Other commitments include the studio content of the successful The
Collectors program and the ANZAC day march and service.... Without the van,
there would be no requirement for an estimated 6 technicians and their
positions would be made redundant. That would put Tasmania below what is
locally thought to be a ‘critical mass’ and impact on our economies of scale
which would have ripple effects onto associated departments.[81]

3.112
Mr Long then noted that there was a broader impact on Tasmania's
regional production and on longer-term employment:

Less production in Tasmania results in a lower Tasmanian
profile on the national stage. With fewer productions happening in the state
and those that do now attracting [sic] a larger slice of the budget, anything
of Tasmania’s desires to be seen as a good location to shoot in with well
controlled budget elements will be lost. Possible employment and career
opportunities will be severely reduced and anyone looking for a career in the
industry will almost be assured of having to leave the state in order to
advance any career possibilities.[82]

3.113
Similar evidence of the importance of OB vans was presented to the
committee by submitters from other states.[83]

State football league broadcasts

3.114
During the course of the inquiry concerns were also raised about the
future telecast of state-based football leagues. For example the Senate passed two
motions on the important role of state based football leagues in South
Australia and Western Australia (the full text of the motions are at Appendix 5).

3.115
Many submitters also gave their unqualified support to the broadcast of
state football league. For example Mr Grant Dorrington, Director of Football of
the West Australian Football Commission told the committee of the importance of
the televising local matches:

...[the state football league actually adds] to the social
fabric of Western Australian life. You can take that from the north, where
there are major Indigenous communities and their life is built around our great
Australian game. I should say again—and we all know—that this Australian game
is unique. It is indigenous, and in my personal opinion that should be heritage
listed. It is about connecting people—connecting them to teams and to the
social fabric.[84]

3.116
The committee notes that on 22 September 2011 the ABC announced that negotiations
to cover local leagues would commence in the coming weeks. The ABC stated in
its media release that it 'understands that local football coverage is
important to the state leagues in developing profile and grass roots support.'
Further, the ABC announced that it is 'continuing to develop a television
production strategy which will include a more formal framework for sports
coverage. That strategy will be released before the end of the year'.[85]

Committee comment

3.117
Whilst accepting that the Charter does not stipulate the function of the
ABC as being a producer of content and that there are real economic pressures facing
the ABC to meet multi-channelling needs, the committee notes that in some
circumstances the Charter obligation to reflect the cultural diversity of the
Australian community could be achieved by the ABC maintaining production units
in state capitals across Australia. In this regard the committee finds the
submission by the Media, Entertainment and Arts Alliance persuasive:

In fulfilling [national identity and cultural diversity
obligation of the Charter] the ABC has long established TV production units in
all State capitals including Sydney, Melbourne, Brisbane, Adelaide, Perth and
Hobart. Given the concentration of the commercial and independent production
industry in Sydney and Melbourne, the production of broadcast material by the
ABC TV units in Brisbane, Adelaide, Perth and Hobart, have been particularly
important in ensuring an industrial base in cities outside of these two cities,
and supporting the development and production of broadcast material with
perspectives and viewpoints created from across the country.[86]

3.118
The committee is concerned that internal production capacity is being
run down with the loss of discrete internal production units within the ABC,
recently seen with the loss of the ABC Arts Unit and the Natural History Unit
in 2007.[87]
This is particularly worrying when a unit or program is produced in one of the
BAPH states.

3.119
The committee supports continued coverage of local and regional events
particularly in the BAPH states. In light of this, the committee is pleased to
hear that the ABC will enter into negotiations 'to bring the state-based
Australian Rules competitions, Queensland’s Rugby League competition and NSW’s
Shute Shield to audiences on ABC1 in 2012 and 2013'.[88]

3.120
The committee acknowledges the important social role of local football
as an avenue for supporting and promoting community interests and as an outlet
for young people. As such, the committee welcomes the ABC's decision to
commence negotiations to broadcast state-based Australian rules competitions,
Queensland’s Rugby League competition and NSW’s Shute Shield for at least the
following two years over 2012 and 2013.

3.121
Further discussion on the funding of regional initiatives is discussed
below.

Sustainability of the ABC's funding

3.122
Closely linked to the issue of the ABC's commissioning model is the
broader subject of the sustainability of the ABC's funding base. The ABC's
submission outlined its current television funding environment:

The Corporation received significant funding increases for
specific genres of television programming in its last triennial funding round
[for the period 2009–10 to 2011–12]. This has allowed it to substantially boost
its output of children’s content and drama, and, to a lesser extent,
documentaries. However, in other output areas, the funds available to ABC
Television have declined. This has been particularly marked over the past two
financial years. Commercial and Screenrights revenues returned to ABC
Television for reinvestment in programming have slumped, while, as described
above, the costs of acquiring content have increased.[89]

3.123
In August 2011, Mr Scott told the National Press Club of the ABC's
significant reliance on government funding: 'We have finite money and little
means of raising more outside government appropriation'.[90]

3.124
This view is supported by a cursory assessment of the ABC's 2010 Annual Report.
In 2009–10 the proportion of the ABC's annual revenue sourced from government
funding was 83.4 per cent whereas other non-government sources such as ABC
Commercial provided only 16.6 per cent.[91]

3.125
According to the ABC's 2010 Annual Report, 28.7 per cent of the ABC's
expenditure in 2009–10 was allocated to 'television programs produced
(including news and current affairs and captioning)'.[92]

3.126
The committee heard evidence that the ABC's operational base funding
received from the Government has declined in real terms. Although there has
been a gradual increase in the level of government funding in real terms since
the late 1990s, several witnesses drew the committee's attention to the 24 per
cent decline since the mid-1980s.[93]
This situation is demonstrated in Figure 1.

Figure
1—ABC operational revenue from government in real terms (1985–2010)

Increasing cost pressures

3.127
Submitters identified a variety of funding challenges currently faced by
the ABC. For example, Mr Simon Whipp, Assistant Federal Secretary of the Media,
Entertainment and Arts Alliance told the committee:

...it needs to be acknowledged that the ABC's base funding
has been under considerable cost pressures from a variety of forces, including
the changing retail sector, the impacting of convergence and the need to engage
with a proliferation of distribution platforms. Importantly, though, base
funding has significantly decreased in real terms.[94]

Even taking recent funding increases into account the ABC, in
adjusted terms receives less funding then it did 25 years ago and employs far less
staff. ABC CEO Mark Scott estimated that "operational funding from government,
including capital, fell in real terms from slightly over $1 billion in 1986
to $800 million today."

Adding to cost pressures are the rising costs of acquisitions
for completed programs from overseas, declining revenues from DVD sales of past
programs, and the costs associated with the increase in servicing three channels,
funding ABC Online, and ABC 24. This has led to a squeeze internally and management
have made some adjustments including reducing the Entertainment budget down from
$13.5 million in 2008/09 to $9.2 million in 2011/12 resulting in some of the
cancellations that have excited this inquiry.[95]

3.129
The ABC itself gave the specific example of the funding pressures
created by the recent emergence of digital television multi-channels:

...the Australian free-to-air television market now has 16
digital multi-channels competing for audiences, content and creative talent.
This has delivered audiences a much greater level of viewing choice. However,
an unforeseen consequence for broadcasters is that, as a result of competition
for programs to fill these channels, the cost of acquired content has increased.
Since mid-2009, the average price paid per hour of acquired content for ABC1
has risen by 8%. The ABC estimates that hourly rates for ABC1 prime-time
programmes will increase by 36% across 2011–12. For the ABC, which operates
within a budget that is indexed annually, such a large increase necessarily
places pressure on its television programming budget.[96]

3.130
Even members of the independent production sector raised concerns about
the increasing cost pressures faced by the ABC:

Overshadowing debate over the appropriate levels of
internal/external production is the broader issue of overall funding at the
ABC.

...

Adding to those challenges is a perfect storm of financial
pressures for Entertainment on ABC TV:

The cost of acquiring overseas programs has skyrocketed due to
competition from the Pay and Free-to-Air digital channels.

The rise of downloading, streaming and portable digital entertainment
has led to a collapse in the DVD market and with it a significant drop in
income from ABC DVD sales.

Funds have been diverted from Entertainment and Factual programs – among its best known and most popular – to other parts of the organization,
most notably, ABC News 24.[97]

3.131
Another area of significant operating cost was production facility
infrastructure such as studios, editing suites and outside broadcast vans. The
committee notes the evidence from witnesses such as independent producers, that
some ABC infrastructure, such as the Perth production studio and OB vans, is
currently being underutilised.[98]
This appears to be a particular issue in the BAPH states. Whilst acknowledging
that the ABC hires out its infrastructure to its co-production partners and
other entities, the committee encourages the ABC to utilise its production
facility infrastructure as effectively as possible, particularly in BAPH
states.

Recommendation 8

3.132 The committee recommends that the ABC actively manage its production
facility infrastructure, particularly in the BAPH states, so that it is
utilised as effectively as possible.

Prior funding of regional
programming

3.133
The Committee received a number of responses to Term of Reference (c) 'whether
a reduction in ABC-produced programs is contrary to the aims of the National
Regional Program Initiative'.

3.134
The National Regional Program Initiative refers to the National Interest
Initiatives (NII) which is also referred to as the Regional and Local
Programming Initiatives (RLP). This would seem to be where the term 'National
Regional Program Initiative' has originated.

3.135
The history of RLP funding requires a brief explanation. This funding was
provided to the ABC in the May 2001 Federal Budget. The stated intention was
that:

The Government will provide $71.2 million over four years to
the Australian Broadcasting Corporation. It is anticipated that most of these
funds will provide additional regional and local programming across all media.
This will allow the Australian Broadcasting Corporation to broaden its coverage
of regional and local events, present regional perspectives to a national
audience and convert regional radio stations to multimedia broadcast centres.[99]

3.136
In 2009–10, at the request of the ABC, RLP/NII funding was rolled into
the ABC's base appropriation. The ABC has assured the committee that 'The ABC
continues to apply these funds to programming activities in line with the
purpose for which they were originally provided'.[100]

3.137
The ABC's ability to meet regional needs in terms of content and
production was boosted in the last triennial funding round with the increase in
funding allocated to the development of the ABC Open digital media project.
This online project provides an avenue for regional communities to create and
distribute material specifically focusing on regional matters which is then
distributed through the ABC Open website.

Support for increased funding

3.138
As a consequence of the increasing pressures on the ABC's budget, there
was universal support for increasing the ABC's base funding. The sentiments
expressed by witnesses such as Mr Whipp were fairly typical:

The building of a highly skilled and motivated workforce,
clear training and professional development, economies of scale that ensure
lower production costs, the development and creation of risk-taking and
distinctive Australian productions could not be supported if left solely to the
market. In order to ensure that these key functions are able to continue to be
carried on by the ABC in a mixed-model environment, a significant increase to
ABC base funding is required. Should this increase not occur, we are likely to
see an increase in outsourcing of production and, in the alliance's view,
further centralisation of production in Sydney and Melbourne.[101]

3.139
Mr Quentin Dempster also expressed a need for the ABC's base funding to
be commensurate with increased real costs for producing programs:

Significantly the ABC Board again noted the historical
reduction in ABC operational base funding: “The 2010-11 operational revenue
from Government of $779million represents a decrease in real funding of
$251million or 24.4% since 1985-86”. The sustainability of operational funds is
emerging as a critical issue for the ABC.[102]

3.140
The committee also received numerous submissions from members of the
public as a form letter which stated the belief that the ABC needed to be
funded to produce sufficient quality programming. This was often expressed in
the following terms:

the ABC to be funded and rebuilt so that it has strong
specialist units to produce high levels of high quality and genuinely local
in-house programming in all program genres on radio, TV and online[103]

Committee comment

ABC's triennial funding

3.141
The committee recognises that the ABC Charter was prepared well before
the age of digital media. In order to fulfil its Charter obligation to provide
an 'innovative and comprehensive broadcasting services of a high standard'[104],
the ABC is now providing a broad range of new services and utilising new media
platforms to engage with its audience in ways which could not have been
imagined when the Charter was approved by the Parliament.

3.142
The committee also recognises that as a result of recent technological
innovations, to fulfil its Charter obligations and to meet growing audience
expectations, the ABC is faced with a range of increasing costs which are
outstripping the indexed funding provided by government. In the medium term, it
is the committee's view that it is not sustainable for the ABC to continue to
meet its Charter obligations, and to maintain a critical mass in the BAPH states,
without some adjustment to its operational funding level.

3.143
The ABC needs certainty of continued funding in order to provide the
widening range of services required to fulfil its Charter and in line with
audience expectations. The committee supports the maintenance of ABC funding at
least at its current level in real terms. During the next triennial funding
round, the committee also encourages the government to consider the range of
new services being provided by the ABC, the increasing cost pressures the ABC
is experiencing, and also the ABC's capacity to maintain a critical mass of
staff, skills, production and infrastructure in regional areas. The committee
recommends that the Government take into account the findings of the
Convergence Review about the structure of the media market and investment in
Australian content by all broadcasters when considering the ABC’s funding needs
in the forthcoming triennial funding round.

Recommendation 9

3.144
The committee recommends that the government take into account the
findings of the Convergence Review about the structure of the media market and
investment in Australian content by all broadcasters when considering the ABC’s
funding needs in the forthcoming triennial funding round.

Regional funding

3.145
As noted previously, the ABC gave the committee the assurance that it
'continues to apply these funds [National Regional Program Initiative fund
which were rolled into base funding] to programming activities in line with the
purpose for which they were originally provided'.[105]
However the ABC did not provide any supporting information to verify this claim
or to demonstrate how it is meeting the ABC Charter responsibility to reflect
the cultural diversity of the Australian community. The committee is concerned
that rolling funding, which had originally been tied to regional production,
into base funding reduces the ABC's ability for coverage of regional
perspectives and production to be guaranteed in the BAPH states.

3.146
In particular, the committee notes that the ABC itself stated in its
submission that NII/RLP funds were linked to building and sustaining production
centres outside of the central Sydney and Melbourne production areas:

In the case of television, NII funds were applied to generate
and sustain production outside of the major production centres of Sydney and Melbourne.[106]

3.147
Despite at times being a more expensive option, the committee is
strongly supportive of ongoing regional production and content. The committee
believes that such activities contribute to fulfilling the ABC's Charter
obligations of providing programs that reflect the cultural diversity of the
Australian community. For the ABC to maintain a presence in these areas and
particularly in BAPH regions, it is important that a critical mass of staff,
skills, infrastructure and production is maintained. Accordingly, the committee
recommends that this issue be considered by the government as part of the triennial
funding round.

Recommendation 10

3.148 The committee recommends that as part of the triennial funding round,
the government consider the ABC's capacity to maintain a critical mass of
staff, skills, infrastructure and production in regional areas.